Uber In No-profit Warning Before IPO On NYSE

Uber has today warned that the prospect of the company making a profit is highly unlikely. The ride-sharing app, which operates in hundreds of countries across the world, today published a report ahead of its flotation on the New York Stock Exchange which gave less than positive figures to potential investors.

The company’s addition to the NYSE in the coming days is likely to value the US-based company at approximately $100bn, though it’s unclear how much of a return investors might see on their shares.

Recent Growth

Recent figures showed that Uber’s growth in the last quarter was substantial, with overall sales rising to $11bn, but was hit with around $3bn worth of losses too.

The report, which was supposed to attract investors, did not disclose the average share price they were planning to sell on but did warn that Uber’s overall operating costs were preparing to ‘increase significantly’ over the next few months.

However, analysts are estimating that shares could cost anywhere between $48 and $55 each, the biggest initial share price since January.

Lyft Rival

The company has come to dominate the car-sharing industry, with a far greater share of the market than closest competitor Lyft, and with plans to roll out more services in the next few years, Uber could well become the dominant force in this evolving industry.

Lyft are, however, a cautionary tale ahead of the flotation of Uber; since the company joined the NYSE at the end of march, its share price has sunk around 15%, with fewer investors choosing to put their money in such a risky company.

There are questions being raised by stock market experts as to whether an investor appetite truly exists for these high risk, potential high return companies who are yet to make a profit.

Headwinds

Uber has been struggling in recent months with legal issues, including several human resources battles about whether their drivers were classed as employees and therefore entitled to the benefits of an ordinary staff worker, including holiday pay and minimum wage.

The company has also been criticised in the past for poor working practices inside its headquarters after complaints from a former engineer went viral.